The lightweight structures play a crucial role in mitigating the environmental impact of buildings throughout their lifespan. There is an interest in exploring various agricultural by-products as effective aggregates for filling framed timber structures. Natural fibers, such as hemp shives, are gaining attention for their environmental benefits, including biodegradability, renewability, recyclability, composability, and their potential to reduce greenhouse gas emissions. By harnessing these natural fibers, it is possible to reduce emissions associated with the most popular wall structures. Moreover, this approach reduces agricultural waste and facilitates integration into a circular economy model. This study delves into the effects of bio-composites created from hemp shives, combined with starch, gypsum, and a geopolymer binder, in fabricating lightweight timber structures. These lightweight structures are compared among themselves and conventionally used wall structures, assuming one square meter of wall with a specific U-value as the comparative unit. Results from a life cycle assessment revealed that these innovative lightweight timber wall structures yield CO2 emissions ranging from −13.94 to 82.89 kg of CO2 equivalent per square meter. In contrast, compared to traditional brick wall constructions, these structures offer substantial savings, potentially reducing emissions by up to 149.38 kg of CO2 equivalent per square meter. This research underscores the promising environmental advantages of utilizing natural fiber-based bio-composites in constructing lightweight timber structures, emphasizing their potential to reduce carbon footprints in building construction significantly.